TAP deal now threatened by banks, as well as Portugal’s “political instability”

Government alerts over the dire straits of soon-to-be privatised airline TAP fell flat as newspapers revealed the whole deal could be scuppered by banks that hold €647 million of the airline’s debt.

But now, Portugal’s current state of political instability has thrown another spanner in the works, particularly as PS leader António Costa has said if he leads the next government, he will pull the whole deal.

Reporting over the weekend, national weekly Expresso explained that the incoming Gateway Consortium is asking banks to lend it €120 million to get TAP up off the ground – and creditors are thus unwilling to release the State guarantees on loans, as they are really not convinced Gateway will be able to cover them.

The paper explained: “Without the State’s guarantee, the bank is looking at the aviation sector, with its enormous worldwide competition, with greater caution.”

“Renegotiation” of TAP’s spiralling debt is required before the privatisation can go ahead.

Thus civil aviation authority ANAC’s approval today for the 61% sale of the trouble-torn airline has cut less ice than originally expected.

It all depends now on whether the banks involved – CGD, BCP, BIC and Deutsche Bank – can be satisfied and what happens on the political scene within the next few days.

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